Agriculture in Portugal

Agriculture in Portugal is based on small to medium-sized family-owned dispersed units. The extent of cooperative organisation has reaching a greater importance with globalization. Portugal produces a wide variety of crops and livestock products. Forestry has also played an important economic role among the rural communities. In 2001, the gross agricultural product accounted for 4% of the national GDP. Portugal is one of the world's largest producers of wine and cork.

History

Agriculture, forestry, and fishing employed 17.8 percent of Portugal's labor force but accounted for only 6.2 percent of GDP in 1990. With the principal exception of the alluvial soils of the Rio Tejo (Tagus River in English) valley and the irrigated sections of the Alentejo, crop yields and animal productivity remained well below those of the other European Community (EC) members. Portugal's agro-food deficit (attributable mainly to grain, oilseed, and meat imports) represented about 2.5 percent of GDP, but its surplus on forestry products (wood, cork, and paper pulp) offset its food deficit.

Portugal's overall agricultural performance was unfavorable when viewed in the context of the country's natural resources and climatic conditions. Agricultural productivity (gross farm output per person employed) was well below that of the other West European countries in 1985, at half of the levels in Greece and Spain and a quarter of the EC average. A number of factors contributed to Portugal's poor agricultural performance. First, the level of investment in agriculture was traditionally very low. The number of tractors and the quantity of fertilizer used per hectare were one-third the European Community average in the mid-1980s. Second, farms in the north were small and fragmented; half of them were less than one hectare in size, and 86 percent less than five hectares. Third, the collective farms set up in the south after the 1974-75 expropriations due to the leftist military coup of 25 th April 1974, proved incapable of modernizing, and their efficiency declined. Fourth, poor productivity was associated with the low level of education of farmers. Finally, distribution channels and economic infrastructure were inadequate in parts of the country. According to government estimates, about 900,000 hectares (2,200,000 acres) of agricultural land were occupied between April 1974 and December 1975 in the name of land reform; about 32% of the occupations were ruled illegal. In January 1976, the government pledged to restore the illegally occupied land to its owners, and in 1977, it promulgated the Land Reform Review Law. Restoration of illegally occupied land began in 1978.Following its adhesion in 1986 to the European Economic Community (EEC), now the European Union (EU), Portugal's agriculure, like in other EU member states, has been heavily shaped by the Common Agricultural Policy (CAP). With the reform of the EU's Common Agriculture Policy, a significant reduction in the number of producers through consolidation (especially in the Norte and Centro regions) resulted in the end of traditional, subsistence-like based agriculture.

In 1998, 28% of the land was considered arable. Of the 2.6 million ha (7 million acres), 74% was cultivated with seasonal crops and 26% was under permanent crops. In 2001, the gross agricultural product accounted for 4% of GDP. Estimates of agriculture production in 1999 included potatoes, 1,150,000 tons; tomatoes, 1,176,000 tons; corn, 1,092,000 tons; wheat, 400,000 tons; olives, 262,000 tons; rice, 159,000 tons; and rye, 52,000 tons. Production of olive oil reached 36,000 tons in 1999. Wine, particularly port and Madeira from the Douro region and the Madeira islands, is an important agricultural export; production totaled 679,000 tons in 1999, down from 1,137,000 tons in 1990. Portugal is the world's seventh-largest producer of wine, although Portugal's wines are mostly unknown internationally apart from port and rosé. Under the influence of EU policies, vineyard areas have been reduced in recent years. In 2001, the value of agricultural products imported by Portugal exceeded that of agricultural exports by $2.56 billion.

Major agricultural products

Portugal's climatic and topographic conditions allow for an extremely large number of crops, including bananas (in Madeira Island), olives, figs, citrus, mushrooms, sunflower, tomatoes and cereals. Wine, dairy, tomatoes for processing, sugar beets, mushrooms, cork and olives are very competitive. Improved marketing practices since the 1990s, enabled other fresh horticultural and fruit products to become very competitive as well.

Retail market and distribution

Competitors are always well represented at Portuguese agricultural fairs and food-related shows. Other nations advertise in Portugal's food magazines and on television, and join with hotels in weekly menu promotions, complete with food products, cooks, exhibits and decorations.

Competition also heats up among Portuguese and foreign firms over extremely expensive hypermarket shelf space. Suppliers fight to maintain and expand exposure of their products as the number of hypermarkets boomed since the 1990s. The struggle is getting even more intense as larger stores continue to carry more private label products, constricting shelf space even more for branded products.

Local manufacturers felt the squeeze on profit margins as big retailers preferred to cut costs by buying from neighboring countries. France and Spain dominate consumer-ready frozen and non-frozen food products. Spanish fruits and horticultural products are easily found all over Portugal's hypermarket and supermarket chains. The European Union, South America, the Middle East and China also compete with dried fruits, tree nuts, pulses and prepared product markets.

With a land area about the size of Indiana, Portugal maintains quite a varied distribution network. The food distribution structure includes wholesalers, retailers (hypermarkets, supermarkets, cooperatives, mom-and-pop stores, convenience stores), institutions and associations. Portuguese retailers generally make their purchases through a broker from the manufacturer or directly from a distributor, cash-and-carry store, traditional wholesaler or from retailer associations and cooperatives. The associations and cooperatives, made up mostly of small store owners, help members increase purchasing power, compete with larger stores and access training and trade seminars. But the role of import agents and traditional brokers declined, and retailers are becoming more adept at direct importing.

Hypermarkets and supermarkets, including joint ventures between the Portuguese and French, control over 50 percent of retail food sales. The Portuguese government put the brakes on the tremendous growth of hypermarkets in an effort to protect smaller retailers. With their high buying power, the hypermarkets can be more competitive in pricing and could easily squeeze smaller businesses out of the marketplace.

Organic farming

Organic farming in Portugal has steadily increased in the past years. From only 73 producers in 1993, it rapidly grew to more than 1,500 in 2005. Today, more than 200,000 hectares are managed organically, which testifies to the prevailing dynamics. The farmers’ sudden interest in organic agriculture clearly has to do with the financial support offered by the European Union and higher market prices. In some cases, such as the olive groves of the northern and central regions, traditional farming approximates organic farming methods, which eases conversion. With horticulture or orchards, the change is not so easy, and therefore there are not as many farmers converting. The supply is still less than the demand, reflecting the fact that organic farming is still at an initial stage. The Portuguese are growing more conscious of health and the environment, which explains the rising interest in natural foods and fibres. Their increasing purchasing power encourages this development. However, these positive factors for the expansion of organic production may not be enough to guarantee a continuous increase in the future, since several obstacles hinder the farmers’ performance.

ee also

*Economy of Portugal
*Fishing in Portugal
*Portugal